Kagara, Cudeco May Be Targets After Law Change, Citigroup Says Share | Email | Print | A A A
By Rebecca Keenan
Sept. 22 (Bloomberg) -- Kagara Ltd. and Cudeco Ltd. may be takeover targets for Chinese and Indian companies after Australia changed its foreign investment laws to attract overseas funds, Citigroup Inc. said.
The new rules open up an extra A$12 billion ($10.4 billion) of foreign investment potential in Australian resources companies that won’t require regulator approval, Citigroup analysts led by Craig Sainsbury said yesterday in a report.
Australia’s Treasurer Wayne Swan last month announced changes to the law to allow overseas investors to buy as much as 15 percent of a company with a market valuation of A$219 million or below without a review by the Foreign Investment Review Board. That’s up from the previous threshold of A$100 million.
“Given the easing of the FIRB screening laws we believe there is the potential for foreign companies, especially those from China and India, to beef up their investment in Australian resource companies,” Sainsbury said. “China is continuing to look for projects that can help lift its self sufficiency in materials and limit its exposure as a price taker for most commodities, the change in the framework may see an acceleration of investment in Australian junior mining companies.”
China may look for commodities it is deficient in including copper, iron ore, bauxite, coking coal and uranium, he said. “For India, given its wealth of natural resources, we see its foreign investment primarily in copper and the coal complex.”
Other targets may include Amadeus Energy Ltd., Roc Oil Co., Terramin Australia Ltd., Toro Energy Ltd., Riversdale Mining Ltd., Atlas Iron Ltd. and Indophil Resources NL, Citigroup said.
KZL Price at posting:
$1.07 Sentiment: Buy Disclosure: Not Held
